Top Ten Countries in the MSCI EAFE Index (as of 12/31/15)
Chart of the Week for January 22, 2016 - January 28, 2016
The Morgan Stanley Capital International ("MSCI") Europe, Australasia, and Far East Index ("EAFE") is a commonly used benchmark to measure non-U.S. developed country stock market performance and the MSCI Emerging Markets ("EM") Index is a commonly used benchmark to measure emerging market stock market performance. Each index consists of about twenty countries and a country can be a member of the MSCI EAFE or EM Index, but not both. The bar chart above shows the net performance in U.S. dollars for the one year periods ended December 31, 2015 and December 31, 2014 for the MSCI EM Index, the MSCI EAFE Index, and the top 10 non-U.S. developed countries. The top 10 countries were determined by their market capitalization in the MSCI EAFE Index as of December 31, 2015. The country with the largest market capitalization (Japan) was listed first, and the country with the smallest market capitalization of the ten countries reported (Sweden) was listed last.
From the perspective of a U.S. dollar-based investor, the EAFE Index returned a negative 0.81% in 2015 (current period - dark blue bars above), which was an improvement on the negative 4.90% return in 2014 (prior period - light blue bars above). Developed European markets were generally negative in the current period, with the exception of Switzerland and the Netherlands, due in part to the depreciation of the euro versus the U.S. dollar. The Japanese market experienced positive returns in U.S. dollar terms in 2015, reversing the negative return in 2014, as generally improved Japanese economic conditions helped share prices. Emerging markets had negative returns in both periods, as falling oil prices, the continued strength of the U.S dollar, and concerns about economic growth in China impacted securities in those countries.
No one can be certain which direction individual countries or entire markets will move in the future, as past trends are no guarantee of future results. It is important to understand the principles of domestic and international markets and diversification before investing.
Posted by: sarah_oz@yahoo.com
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